White House Announces Medical Debt Crackdown

The White House yesterday outlined an aggressive plan to crack down on “malicious” and “predatory” billing practices related to medical debts, including holding debt collectors “accountable for harmful practices,” while also pledging to have the medical debts forgiven for more than half a million low-income veterans.

The announcement is the latest in a string of bulletins and alerts from branches within the federal government targeting medical debts.

“Credit scores essentially are supposed to measure how responsible you are with your money,” Vice President Kamala Harris said during an announcement yesterday. “Having medical debt because you were sick or injured should not lower your credit score and make it more difficult to secure the help you need to get out of debt. It’s not logical.”

A video from yesterday’s announcement is below.

To help it better understand the size and scope of what it is dealing with, the Department of Health and Human Services will request data and information from more than 2,000 healthcare providers regarding medical bill collection practices, lawsuits against patients, third-party contracting, and debt buying practices, among others. The Department will begin to use this data as part of its grant-making decisions, while also publishing certain data to the public, and sharing information about potential violations with law enforcement agencies.

The White House also announced that the Consumer Financial Protection Bureau will investigate credit reporting agencies and debt collectors that violate patients’ and families’ rights “and hold them accountable,” it announced. This includes targeting “coercive credit reporting” while also determining whether medical debts should be included in a consumer’s credit report.

All federal agencies have also been instructed to no longer factor medical debts into any of their credit underwriting programs, which span from the Department of Agriculture to Veterans Affairs to the Federal Housing Finance Agency.

While consumer advocates applauded the announcement, critics pointed out that the moves from the federal government don’t address the underlying issue — the skyrocketing cost of healthcare in America.

“Policymakers should be cognizant of potential unintended consequences that could undermine some of their goals,” said the American Enterprise Institute’s Ben Ippolito, in a published report. “Lenders may find ways to proxy for the hidden medical debt or try to avoid consumers likely to have them.”

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